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CHAPTER III.

ACCEPTANCE OF BILLS OF EXCHANGE.

SECTION 13. IN GENERAL.

The acceptance of a bill of exchange is an agreement generally on the part of the drawee, but sometimes on the part of some other party, to pay the bill absolutely according to its tenor, or according to special terms contained in the contract of acceptance.1 The holder of a bill has the right to demand a general and unqualified acceptance in writing upon the bill itself, and may refuse to accept any qualified accept

ance.

"Where a draft is given directing the drawee to pay absolutely a sum of money to the payee it is the right of the payee to have an unconditional and unqualified acceptance of the same; and if he chooses, without the consent of the drawer, to take a conditional, limited, or qualified acceptance of the draft, he thereby releases the drawer from all liability on the draft."

SECTION 14.

LIABILITY OF ACCEPTOR AND DRAWER.

The drawer of a bill is under no legal obligation to accept the bill, even if he is indebted to the drawer to the amount of the bill, or has funds of the drawer in his possession to that amount, unless he has for a valuable consideration expressly or impliedly agreed

'Cox vs. National Bank, 100 U.

S., 712; Clark vs. Cock, 4 East,
57.

• Gibson vs. Smith, 75 Ga., 33.
'See Chitty on Bills, 28.

Laing vs. Barclay, I. B. & C., 398; 83 C. L., 170.

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• Helm vs. Meyer, 30 La. Ann., 943. Where funds are sent to a person for the purpose of meeting a bill drawn upon him, and he retains same without objection or promise to accept, it will be implied.

to accept it. When a drawee has thus agreed to accept a bill he is liable in damages for the breach of his contract, the measure of damage being the inconvenience and loss caused to the drawer by the drawee's failure to accept.'

Upon acceptance the drawer, now the acceptor, becomes the principal debtor and the party primarily liable for the payment of the bill. The liability towards the holder, of the acceptor of a bill of exchange, is the same as that of the maker of a promissory note, and is governed by the same rules.

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The acceptance of a bill by the drawee admits everything essentially to the validity of a bill,10 including the existence of the drawer, the genuineness of signatures," the inviolacy of the body of the bill," the capacity of the parties, the authority of the parties," and that there were funds of the drawer in the hands of the acceptor.15 None of the facts thus admitted can be disputed in a suit by a bona fide holder for value, but as between the immediate parties to the instrument the true state of facts can be shown.

SECTION 15. WHO MAY ACCEPT.

Except in the case of an acceptance supra protest, the acceptance must be made by the drawee of the bill, and acceptance by any other person is not permitted under the law merchant. An acceptance by the suc

• Riggs vs. Lindsay, 7 Cranch (U. S.), 500.

'Prehn vs. Royal Barb L. R., 5 Exch., 92.

• Matter of Babcock, 3 Story (U. S.), 399; Diversey vs. Moar, 22 Ill., 331; 74 Am. Dec., 157; Marsh vs. Law, 55 Ind., 271. Capital City Ins. Co. vs. Quinn, 73 Ala., 558.

10 Jarvis vs. Wilson, 46 Conn., 90; 33 Am. Rep., 18.

11 Bank of Commerce vs. Union
Bank, 3 N. Y., 230.
"Ward vs. Allen, 2 Met. (Mass.),
53.

"Drayton vs. Dale, 2 B. & C., 293;
9 E. C. L., 91.

"Belknap vs. Davis, 19 Me., 455.
"Byrd vs. Arkansas, 7 Ark., 321;
Gillihan vs. Myers, 31 Ill., 525.
10 May vs. Kelly, 27 Ala., 477;
Heevan vs. Nash, 8 Minn., 407;
83 Am. Dec., 790.

cessor of an official upon whom a bill is drawn is not binding.17

Where several drawees are named in a bill it may be accepted by any one of the number," and the same is true when a bill is addressed to two persons in the alternative.10 An acceptance can be made by an agent, but there is some doubt, in such cases, as to whether the payee is bound to receive such an acceptance. SECTION 16. ACCEPTANCE, HOW AND WHEN MADE.

An acceptance may be made either in writing or orally. If in writing, it is held that any form of words which do not in themselves negative the request of the bill should be treated as a valid acceptance.20 The following have been held to constitute a valid acceptance when written on the bill: "Seen;"" "Presented;' "I will pay this bill," " or simply the name of the drawee." An acceptance may be made on a separate paper; but in such cases the acceptance must be clear and unequivocal.25

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"In jurisdictions where acceptances are not required to be in writing, or the statutes do not otherwise modify the common law, parol acceptances, if assented to by the holder, are permitted. A parol acceptance is any form of words used by the drawee which by reasonable intendment can be made to signify that he honors the bill. There are some limitations to this rule. These words are to be addressed to the drawer or holder. They must be assented to by the holder.

"Spalding vs. McKay, 5 W. C. Q.

B. (U.S.), 656.

" Smith vs. Milton, 133 Mass., 369. 19 Mountstephen vs. Brooke, 1 B. & Ald., 224.

so Leslie vs. Hastings, 1 Moody & R., 119.

* Barnet vs. Smith, 10 Frost (N. H.), 256.

"Norton on Bills and Notes, Sec. 49; Parson on Bills and Notes, 282.

"Ward vs. Allen, 2 Met. (Mass.), 53.

"Spear vs. Pratt, 2 Hill (N. Y.), 582.

"Coolidge vs. Payson, 2 Wheaton, 66.

They must relate to an existing bill, for, if they pertain to a future bill, they will not be deemed an acceptance. They must be unequivocal, for, if they are equivocal, they will not be deemed an acceptance." 20

An implied acceptance may result from any actions on the part of the drawee which justify the holder in drawing the conclusion that the drawee intends to accept the bill.

An acceptance of a bill may be made before the instrument has been completed as a bill of exchange," or after the maturity of the bill," in which latter case it is construed as a promise to pay on demand." A bill may be accepted after the death of the drawer."

SECTION 17. ACCEPTANCE SUPRA PROTEST.

An acceptance supra protest, or for honor, is an acceptance of a bill after protest, by a stranger to the bill, for the benefit of all subsequent parties, and for the protection of the credit of some party to the bill. An acceptance supra protest creates a conditional agreement to pay if the original drawee does not, and may be made either after dishonor for non-acceptance, or after protest for better security after acceptance. This last form has been described as follows:

"The custom of merchants is stated to be that if the drawee of a bill of exchange abscond before the date when the bill is due, the holder may protest it in order to have better security for its payment, and should give notice to the drawer and indorsers of the absconding of the drawee; and if the acceptor of a

Norton on Bills and Notes, page

93. " Pittsburgh Bank vs. Neal, 22 How. (U. S.), 97; Hopps vs. Savage, 69 Md., 513.

" Wynne vs. Raikes, 5 East, 521; Stockwell vs. Bramble, 3 Ind.,

428.

"Grant vs. Shaw, 16 Mass., 343; 8 Am. Dec., 142.

30 Cutts vs. Perkins, 12 Mass., 206.

foreign bill become bankrupt before it is due, it seems the holder may also in such case protest for better security. The neglect to make this protest will not affect the holder's remedy against the drawer and indorsers, and its principal use appears to be that by giving notice to the drawer and indorsers of the situation of the acceptor, or by which it is become improbable that payment will be made, they are enabled by other means to provide for the payment of the bill when due."""

"Chitty on Bills and Notes, 383.

Val TX.-3

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